Floating liquefied natural gas (FLNG): is it still a nice niche?

Abstract

Two years ago we predicted a bright future for floating liquefied natural gas (FLNG) on the back of a decade of strong growth in the LNG industry. This paper provides an update to that previous paper, examining the impact of both low prices and lower than anticipated growth in the LNG markets on the emerging FLNG technology. After more than a decade of strong growth, the outlook for LNG changed in 2015. Although new markets are emerging, growth in these areas is being offset by contraction in the established markets. New supplies are coming on stream, and adding to an already oversupplied market (at least in the short term). As a result market dynamics are continuing to change, presenting challenges to new supply opportunities. Against this background we have seen several both land based LNG and FLNG projects delayed, deferred or cancelled, but it is notable that the only LNG project outside of the USA to obtain sanction in 2015 was an FLNG project in West Africa (the Perenco Cameroon FLNG project). This presentation reexamines the prospects for FLNG, by: examining how the changes in market dynamics have impacted and will impact the development of FLNG; looking at how the change in price expectations has changed the space in which FLNG must operate; providing an update on current FLNG developments around the world; revisiting historical analogies to FLNG developments; and outlining the impact this has for offshore producers in Australia and the region.